By the OGJ Online Staff
LONDON, Jan. 2 -- Santos Ltd. has quit a $3.5 billion pipeline project to move Papua New Guinea (PNG) natural gas to Australia.
ExxonMobil Corp. said it and the other partners -- including ChevronTexaco Corp., Oil Search Ltd., and Orogen Minerals Ltd. -- signed a new agreement without Santos, the third-largest Australian oil company. They were negotiating how to divide Santos' 12.5% stake, said Chris Welberry, a spokesman for ExxonMobil. Oil Search and Orogen are presently in merger talks.
The 3,200 km pipeline project has been delayed because of a dispute between the partners on how to split revenue from the gas and because of a lack of political support. The companies have yet to give final approval to the project, which originally was scheduled to be built by late 2001.
The new agreement sets the terms under which the partners would operate, ExxonMobil said. It replaces a previous accord that expired Dec. 31.
The company spokesman said, "The project will continue under a new heads of agreement that provides more flexibility in the commercial interaction between the partners. Santos will not be participating in the new heads of agreement."
In a separate statement, Santos said it disagreed with ExxonMobil on the commercial terms of the new agreement.
Santos managing director John Ellice-Flint said, "Santos remains committed to the development of the PNG Gas Project but it must first be satisfied with the commercial foundations on which the project would be based."
Santos will keep its 31% stake in Hides gas field in Papua New Guinea, which will supply the pipeline.
ExxonMobil owns 31% of the gas pipeline project. Oil Search owns 27.5%, Orogen 13%, and ChevronTexaco 9.7%. Japan Petroleum Co. has 3.4% with the remaining 2.9% held by MRDC, a cooperative of PNG landowners.